Annual Contract Value (ACV)

Annual contract value (ACV) is a term used to describe the average annual revenue generated by a customer contract. It is typically calculated by dividing the total contract value by the length of the contract in years.

For example, if a customer signs a three-year contract worth $30,000, the ACV would be $10,000 ($30,000 / 3 years).

ACV is often used by businesses as a way to measure the value of customer contracts and to compare the relative value of different contracts. It is also used in sales and marketing to help forecast future revenue and to set targets for sales teams.

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